In today's global economy, it is common for a seller to provide goods or services without receiving prior payment for such goods or services. Under these circumstances, it is typical for the seller to invoice the buyer for the price of the goods or services. The invoices can be provided with the goods or services or may be sent at a later date. While invoices can be used for individuals, it is a more common practice for corporations to use such an invoice system.
The payment terms for the invoices can be negotiated between the parties or the seller establishes the payment terms. Typically, seller will give buyer 30 days from the invoice date to make payment. However, while 30 days may be customary, the seller would prefer to receive payment as soon as possible. Therefore, in order to encourage the buyer to make prompt payment, the seller will often offer the buyer a discount if the buyer pays prior to the established final payment date.
A typical discount used is referred to as “2, 10 net 30.” This is short hand to indicate that the full amount is due to the seller in 30 days. However, if buyer pays within 10 days, the amount due is discounted by 2%. By so doing, the seller avoids cash flow problems and the buyer receives the goods or services at a discount rate.
While discounts are routinely offered by sellers, many buyers do not take advantage of these discounts. Buyers often have cash flow problems which limits their ability to take advantage of the discounts. The buyers simply do not have the cash and, therefore, no matter how attractive the discount may be, the buyers cannot participate. Alternatively, buyers may feel that they can get a better rate of return on their money and choose not to take the discount offer. By deferring payment as long as possible, the buyer believes that they can use or invest the money and receive a higher rate of return than the discount offered by the seller. In fact, many corporations are not paying the invoices within 30 days, but rather deferring payment for as much as 90 days. Another reason that buyers do not take advantage of the discounts relates to the internal bureaucracy within the buyer's organization. In large organizations, invoices must be approved by the appropriate group and sent to the accounting department. Often the accounting department will not receive the invoices until after any discounts period has expired. It is also not uncommon for the accounting department to not be aware of any discount terms which were previously negotiated.
Therefore, it would be beneficial to provide a system or method for buyers to identify any discount opportunities available. Also, if the buyer elects to not take advantage of the discount, it would be advantageous to provide a system or method to allow third parties to take advantage of the discount terms.